My 1099 DIV does not list a state on line 11. Where do I find the state the form is asking for?

[SteamTrain · Accepted solution]

Line 11 on a 1099-DIV, usually refers to tax-exempt bond interest you received from some type of bond fund.

1)  Unless the bond fund you own was specifically targeted to only your own state's bonds, the easiest selection is to go to the end of the list of states and choose "Multiple States"  for it all.   (for the desktop software, the selection shows as "More than one state" ...same thing though).

2)  IF the fund you own is targeted to your own state, or if box 11 is pretty high (say 1,000 or higher), then you can sometimes get some state tax benefit by breaking out just the amount that came from your own state's bonds or any US territories, like Puerto Rico.  But you have to calculate that from data sheets that the mutual fund publishes each year .   Once you calculate that $$ amount you would break it out as shown in the pictures below.   (Illinois doesn't allow this for their residents and Mutual Bond Funds....only for individual IL bond interest reported in box 8 of a 1099-INT.  CA and MN residents have strict limitations on whether they can do it)

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[sonzoil]

So just so I understand the state tax.  In your example for North Carolina, is the $33 dollar amount what is taxed on by the state out of the whole $333, or is it the amount that is not taxed or exempt out of the $333 total?

[SteamTrain]

That is the amount of $$ that came from NC-specific bonds.  As such that $33 of Exempt interest income will not be back-added to NC income, and will not be taxed by NC.  Neither will the PR $$.

The Mutiple States (More than one state) $$ came from bonds issued by other states.  Those $$ are not exempt from NC taxation...and because those $$ were NOT included in the Federal taxable income, these $$ are added back into the NC tax return as additional income that NC will tax.

[sonzoil]

Ok. Why is Puerto Rico exempt from North Carolina taxing it?

[DianeW777]

North Carolina does not require an income adjustment for notes or bonds issued by Puerto Rico.

Interest Income from Obligations of Other States

North Carolina's individual income tax return may require an adjustment for interest received on notes and bonds. All taxpayers who received interest on notes and bonds from states other than North Carolina must add this interest income to the North Carolina return because this interest income has not been included on your federal return. Notes and bonds issued by Guam, Puerto Rico, and the U.S. Virgin Islands are not subject to this adjustment.

[sonzoil]

Do you know what the situation would be in Massachusetts?

[ThomasM125]

Interest on Massachusetts bonds are tax exempt in that state. 

@sonzoil

[sonzoil]

But just Mass bonds, not Puerto Rico, etc ?

[SteamTrain]

As far as I've ever seen....for any state with an income tax, that state exempts US territory bond interest.

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Ooops, a "however" for some other states, (but not applicable to MA).

1) IL doesn't allow any exemptions for any tax-exempt interest from Mutual funds....i.e. box 11 on a 1099-DIV.   But do allow it for UL bonds and US Territories if you hold specific individual Bonds (box 8 on a 1099-INT).

2)  CA and MN have certain % minimums in order to allow the deductions when issued from a Mutual fund....essentially you need to buy a State Specific bond fund for those two states.   Of course, if one holds individual state or US Territory bonds, those $$ are still exempt.

[SteamTrain]

Here's one list of MA-exempt interest...includes Guam & Puerto Rico  (I don't see US virgin Islands, but maybe they haven't issued any bonds)

TIR 89-8: Income Tax Treatment of Interest and Gains on Federal Obligations; IRA Distributions Consi...

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